Dayton says he won't sign tax bill without school funding

Youssef Rddad and Kyle Potter, Associated Press

Updated 7:03 pm, Monday, May 14, 2018

ST. PAUL, Minn. (AP) — Minnesota Gov. Mark Dayton gave Republican legislative leaders an ultimatum on Monday by saying he wouldn't sign a tax bill unless they provide $138 million in emergency school funding, halting budget negotiations before they even began.

The Democratic governor and Republican-controlled Legislature have less than a week to work out massive differences, from how to cut taxes while matching the state's tax code with the recent federal overhaul to an array of government spending. But Dayton's demand started that bargaining off on a rocky foot, with GOP Senate Majority Leader Paul Gazelka calling it "next to impossible."

It left the two sides blaming each other for a breakdown before talks even began. The Legislature adjourns May 21.

"He didn't talk about this before session, he didn't talk about it after session started," House Speaker Kurt Daudt said. "It looks like a political thing. I hope that it's not."

Dayton first made the request at the start of May, saying 59 school districts across Minnesota were facing possible layoffs due to budget shortfalls. That request immediately triggered complaints from Republican lawmakers that it came too late, and should wait until the next governor and Legislature set a new state budget next year.

But Dayton defended the rescue package Monday as necessary, and called it "absurd" that GOP lawmakers suggested it was too late in the legislative session.

"There's plenty of money sitting in their tax bill," he said noting Republicans' agreement. "I will not engage in any negotiations on the tax bill or sign the tax bill until we have an agreement to provide emergency school aid."

Dayton clearly hoped to put pressure on lawmakers to provide the extra money to protect one of the top priorities of the session: the so-called tax conformity bill. And that debate is already complicated.

Lawmakers have struggled all session to craft a plan that syncs Minnesota taxes with the new federal tax breaks passed by Congress. Failure to do so could cause headaches during next year's tax filing season and trigger some incidental tax increases on families and businesses.

Dayton and Republicans have drastically different plans. Dayton's proposal would issue tax credits to middle- and low-income families while leaving many businesses with a higher tax burden. Republicans in the House and Senate over the weekend agreed to modest cuts to income tax rates for the two lowest-income tax brackets.

Although the Legislature adjourns May 21, lawmakers actually have less time to work. That's because the state constitution bans the Legislature from passing bills during its final day in session.